I read that, and I'm doing exactly that.
On the Settings/Catalog page when I set the single product image to 300x300 and use select a featured image which is 300x300, the image on the page is not 300x300 but more like 400x400 and is blurry.
When i use a 400x400 image is still is blurry on the web site.
If you check this url you will see what i mean; http://www.0dayunlock.com/shop/att-iphone/
Also if you go to the bottom of the page and see the related item, you will also see a huge image that is blurry, but when you click on the item and then click on the featured image you will see that it's not blurry.